A common theme emerged from our interviews: virtually all CEOs are changing their business models. Two thirds are implementing extensive innovations. Why now? Because it's possible. The Internet is allowing them to enter niche markets and reshape their processes, delivery channels and ways of partnering. Companies are innovating in three ways:

• Rethinking their enterprise business model: which processes are kept in house or spun out to partners?
• Changing their pricing models, such as Gillette which switched its primary revenue from razors to blades
• Reshaping the way their industry conducts business, such as the way Apple ipod turned the music business upside down

U.S. pharmaceutical maker Eli Lilly turned to business model innovation to meet an ongoing industry challenge: bring new medicines to market faster. Its newest model is based on pioneering risk-sharing relationships, such as its 2007 agreement with Nicholas Piramal India Limited (NPIL). NPIL will develop one of Lilly's molecules at its own expense, from preclinical work to early clinical trials. If NPIL is successful and the compound reaches the second stage of human testing, Lilly can reacquire it in exchange for milestone payments and royalties.